Does a Checkersrallys franchisee have the right to claim punitive or exemplary damages against the franchisor?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
18.10 Limitations on Damages.EXCEPT WITH RESPECT TO YOUR OBLIGATION TO INDEMNIFY US FOR THIRD PARTY CLAIMS UNDER SECTION 17.02, AND EXCEPT WITH RESPECT TO OBLIGATIONS REGARDING USE OF THE MARKS IN SECTION 5 AND THE CONFIDENTIAL INFORMATION IN SECTION 7.01, FRANCHISOR AND FRANCHISEE (AND ITS OWNERS) EACH WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO OR CLAIM FOR ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER. YOU AND EACH OF YOUR OWNERS WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO RECOVER CONSEQUENTIAL, SPECIAL AND INCIDENTAL DAMAGES FOR ANY CLAIM DIRECTLY OR INDIRECTLY ARISING FROM OR RELATING TO THIS AGREEMENT.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, franchisees generally waive the right to claim punitive or exemplary damages against the franchisor. The franchise agreement states that, to the fullest extent permitted by law, both Checkersrallys and the franchisee (including their owners) waive any right to claim punitive or exemplary damages against each other. This waiver is mutual, applying to both the franchisor and the franchisee.
However, there are specific exceptions to this waiver. The waiver does not apply to the franchisee's obligation to indemnify Checkersrallys for third-party claims, nor does it apply to obligations regarding the use of Checkersrallys's marks and confidential information. This means that in these specific cases, the right to claim punitive or exemplary damages may still exist.
Additionally, the franchisee also waives the right to recover consequential, special, and incidental damages for any claim arising from or relating to the franchise agreement. This further limits the types of damages a franchisee can seek from Checkersrallys in the event of a dispute. Prospective franchisees should be aware of these limitations on damages, as they can significantly impact the potential recovery in any legal action against the franchisor.